Eminent Domain for Exporting Energy?

Eminent domain is the controversial exception to the general rule that no one can take your land without your consent. The Fifth Amendment to the U.S. Constitution allows the government to take your land for “public use” so long as it pays you fair compensation.

But what is a public use? Should pipelines and power-lines that help companies export energy to other states and countries count as a public use? Is it legitimate for states to let energy transport companies use eminent domain to serve the public in other states or countries?

This issue—”which public?”—is an increasing focus of litigation across the United States because many state laws and constitutions, like the federal constitution and federal laws, limit eminent domain to projects that serve a “public” purpose. At the same time, increasingly integrated North American energy markets mean that more and more electricity, oil, and gas are crossing state and national borders.

Just last Friday, the Iowa Supreme Court held that sending oil to neighboring states can count as a public use. But there is also a broad movement for a go-it-alone eminent domain policy, including court decisions in West Virginia and Kentucky that say out-of-state consumers don’t count as the “public.” And the D.C. Circuit is now considering a similar challenge to a natural gas pipeline that will allow some natural gas to be exported to Canada.

As I argue in this op-ed, it would have been a huge mistake for Iowa to adopt a go-it-alone eminent domain policy. Iowa has world-class wind power that will be most valuable if Iowa can export it to states like Illinois that have more people and less wind. A no-eminent-domain-for-export policy would have been terrible for Iowa.

More broadly, there are huge benefits from interstate and international energy trade. For decades, Canada has sent us affordable oil and cheap, clean hydropower. And states that have affordable oil and hydropower generally export to states that do not. If there was no eminent domain for export power-lines and pipelines, we all would be stuck paying more for dirtier energy.

And we need energy transport now more than ever. As I explain here, the U.S. is in the middle of three energy booms: history’s biggest oil rush plus more natural gas and more renewable power. Oil has many ways to get to market—pipeline, truck, rail, and boat—but natural gas and renewable power production depend on transport. Natural gas has environmental benefits if it can be piped to places that need to replace coal and oil. Solar and wind can provide cheap, clean energy if we build power-lines to take it to market. And new pipelines and power-lines would help American companies and landowners get more money for their gas and power. 

None of that will be possible, however, if go-it-alone state policies make it impossible to bring energy where it is needed. Landowners are rightly concerned about eminent domain and governments should reform the eminent domain process and offer more compensation to protect them as I suggest in my forthcoming Minn. L. Rev. article with Alexandra Klass. But ignoring interstate and international consumers is not a sensible reform and would cut off much of the promise of the new U.S. energy economy.